Sterling Org. Closes Fund With $495M in Commitments

With leverage, Sterling Value Add Partners III has roughly $1.3 billion in purchasing power, which will be aimed at retail centers nationwide.
Brian Kosoy
Brian Kosoy, managing principal, president & CEO, Sterling Org.

Sterling Org. has made the final closing of its fourth institutional, discretionary closed-end fund, Sterling Value Add Partners III, with total capital commitments of $495 million, exceeding its fundraising target of $450 million.

Commitments reportedly were made by a diverse investor base that includes domestic endowments, foundations, private and public pension plans, fund of funds, and large family offices. With leverage, SVAP III has about $1.3 billion of buying power. The fund will target primarily grocery-anchored shopping centers, street retail, power centers and mixed-use properties in major markets across the United States.

We are taking advantage of the dislocation in the retail sector,” Principal & Chief Marketing Officer Adam Munder told Commercial Property Executive. “As capital is flowing away from retail real estate and many investors are painting all retail assets with the same brush, we are able to capitalize on depressed pricing on new acquisitions.”

Sterling’s first and second funds in its value-add series, SVAP I and SVAP II, closed with total capital commitments of $138 million and $311 million, respectively.

As a result of macro challenges facing traditional retailers, we are keenly aware that it is not an easy time politically for institutional investors to invest in brick-and-mortar retail real estate,” Brian Kosoy, managing principal, president & CEO of Sterling, said in a prepared statement.

Based in Palm Beach, Fla., Sterling is a vertically integrated private equity real estate investment management and services firm.

An appetite for bricks and mortar 

A Sterling spokesperson noted that all of the company’s funds are retail-centered. Sterling United Properties I, a core closed-end fund vehicle that closed with total capital commitments of $160 million, focuses on stabilized retail properties.

Just last month, the SUP fund bought a fully leased, grocery-anchored shopping center in Lilburn, Ga., in metro Atlanta, for $10.5 million. A Sterling executive noted that the property is well positioned in a strong submarket of a major MSA. In June 2017, Sterling bought Palm Valley Marketplace, a grocery-anchored shopping center in metro Phoenix, for $22.5 million, again on behalf of the SUP fund.

Image courtesy of Sterling Org.